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HEALTH ACTION NETWORK - ADVOCATES FOR BETTER HEALTH CARE SOLUTIONS

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This Week in Health Care Reform - July 15th, 2016

Annual health care spending is found to be on the rise; drug manufacturers’ pricing power remains unchecked; and, a focus on consumer engagement in Medicaid yields promising results in one state.

Week in Review

Health Expenditures Rising: This year, for the first time, national health spending will average $10,000 a person, reversing the trend of exceptionally low growth that had been observed over the past several years.  In a new report released by actuaries from the Centers for Medicare & Medicaid Services (CMS) this week, health care expenditures were projected to rise by an average rate of 5.8 percent beginning last year and through 2025, by which time, health care is expected to represent 20.1 percent of the total economy, up from 17.5 percent in 2014, and, pointedly, at a growth rate 1.3 percent faster than the overall economy.  While analysis continues as to the specifics of what’s driving the increase in spending, the acceleration is believed to be largely attributable to our improved economy, faster growth in medical prices, and an aging population.  However, as Sean Keehan, CMS economist and a lead author of the study noted, “There’s uncertainty in a lot of our estimates, especially on prescription drug spending.”  Having seen what one costly drug can do to the cost curve, e.g., Gilead’s $1,000-a-pill hepatitis C drug, Sovaldi, there’s mounting concern over how yet-to-be-released drugs, including newly introduced immuno-oncology treatments from Bristol-Myers Squibb and Merck with list prices of about $150,000 per year, will undoubtedly impact overall spending.       
                                            
Rx Pricing:
Speaking of Gilead, it was also reported late last week that the drugmaker had increased the list prices of six of its drugs, two of which – both parts of an HIV regimen – having already undergone price increases just six months ago.  The decision comes on the heels of similar moves by other pharmaceutical manufacturers and only adds to the ongoing uproar over the escalating and unsustainable cost trajectory of drugs.  The angst over Gilead’s latest price increase was only further exacerbated when it was discovered that, even as the drugmaker’s profit margin was soaring, its tax rate was headed in the opposite direction, owing to the company having moved some of its intellectual property offshore, thereby cutting its tax bill by $10 billion since 2013.  Having profited considerably off of its life-saving hepatitis C drug, Sovaldi, some are decrying Gilead’s exploitation of existing tax loopholes as a “gross injustice”, especially in light of how so many of the discoveries at the heart of these drugs are being made by federal researchers – Sovaldi being no exception, as the funding behind some of the drug’s research came from the National Institutes of Health and the Department of Veterans Affairs, which collectively spend billions of dollars each year on grants and other financial assistance for promising medical research.  With efforts to keep drugmakers’ pricing power in check being largely unsuccessful, experts are looking to lawmakers to tackle the issue of rising drug prices, as worry mounts that these pricing tactics have resulted in a dangerous new breed of pharmaceutical companies. 
                                            
HIP 2.0:
As we continue to place a greater emphasis on value in our health care system, that’s required each of us to become better, more informed patient-consumers – the thinking being that, the more engaged we are in our own health care decisions, the healthier we’ll ultimately be.  In an effort to take this concept from the lab to the field, the state of Indiana, under its innovative approach to its Medicaid program, launched the Healthy Indiana Plan (HIP) 2.0 and has already seen what happens when beneficiaries are empowered to be more engaged in their own health care.  Specifically, HIP 2.0 members paying for a higher level of benefit (HIP Plus as opposed to HIP Basic) are accessing more preventive services, following up on care with greater regularity, and going to the emergency room for non-emergency treatment far less.  Despite being relatively new, the early success of HIP 2.0 countermands long-held assumptions regarding Medicaid beneficiaries, namely, that this population isn’t motivated by financial incentives.  In fact, overwhelmingly, these members report higher levels of satisfaction with their health care, in spite of the financial contribution, according to a new white paper released by Anthem’s Public Policy Institute.  It’s hoped that Indiana’s unique approach to the program will help demonstrate how alternative approaches to Medicaid expansion can provide positive outcomes to both the beneficiary and to the state.  HIP 2.0, which was launched in February of 2015, already serves some 387,000 Hoosiers through one of its two aforementioned major benefit plans – HIP Plus or HIP Basic.

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Looking Ahead

With the national party conventions underway beginning next week, lawmakers are readying to leave Washington till after Labor Day.  And, speaking of those conventions, now that we know who each party will be putting forward as their respective nominee, the polling machinery is starting to kick into high gear.


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